Restaurant Finance Across America
Archived postings from May, 2010...
Consumers Love Their Sandwiches
Posted: Thu, May 27, 2010 at 9:28am (CDT)
Anyone looking for a restaurant concept that can withstand even a brutal economic downturn should look for something that serves its product between two buns, or pieces of bread. According to the NPD Group, not even skyrocketing unemployment and a depressed housing market can stop the American consumer from eating burgers and sandwiches -- diners ate more than 22 billion of them last year. That's an increase of 1.8 billion servings since 2005. The popularity of sandwiches increased in all dayparts, and in both full-service and limited-service restaurants.
BIP Fund Getting Into Smoothies
Posted: Wed, May 26, 2010 at 11:25am (CDT)
BIP Opportunities Fund recently announced their $4.4 million growth capital investment into Tropical Smoothie Cafe, enabling the company to accelerate its franchise development efforts. The BIP investment will allow Tropical Smoothie to begin the 'buy-back' of certain franchised territories operated by area developers, providing those franchisees a direct link to Tropical Smoothie's corporate office support. In addition, the capital infusion will allow the company to invest in new technologies, personnel and operational infrastructure to significantly ramp up their franchise sales and support efforts.
"Tropical Smoothie Cafe is not your traditional smoothie concept, but rather an attractive quick casual restaurant brand that continues to derive greater than 50 percent of their revenues from a creative assortment of gourmet wraps, signature sandwiches, flatbreads and salads," said Scott Pressly, a managing partner at BIP. "Now we can build the infrastructure required to significantly accelerate the franchise growth of the business and bring Tropical Smoothie Cafe to new cities across the country." The company currently has 270 quick-casual restaurants in 34 states.
Atlanta-based BIP was formed in 2009 by Pressly and his two partners Mark Buffington and Shawn Welch. Tropical Smoothie is not their first investmentthey cover other business sectors such as healthcare and technologybut its the first in the franchise sector. BIP will provide capital and operational support to emerging, high-growth companies, investing between $2 million to $5 million in companies with revenues up to $15 million. Investments will generally be based within the Southeast but the fund will look at other opportunities outside that geographic area.
Pressly himself is well known within franchise circles, spending some of his career with Roark Capital, a private equity firm that heavily targets the franchise community. He also held operational roles with U.S. Franchise Systems, a publicly traded hotel franchisor. Welch was also a partner with Roark for four years with experience in franchising.
The approach to this investment was different than most firms' strategy. Pressly has his own firm, Van Ness Capital Advisors, which provides strategic consulting to franchisors. Van Ness had worked with Tropical Smoothie for months prior to the investment, providing strategic advice to the company's management team. Before BIP made the investment, the company was already honing the business, including putting together a five-year strategic plan.
One area they uncovered was the opportunity to buy back area developers' franchises and territories so the franchisor could offer those to the franchisees.
"We want to serve the franchisees directly," said Pressly. The royalty stream also comes back to the franchisor, and "we can continue to invest in the franchise base." Already, the franchisor has hired more field reps to help franchisees and is adding infrastructure to ramp up franchise sales.
"BIP brings so much to the table experience, contacts and capital in one shop," said Eric Jenrich, CEO and co-founder of Tropical Smoothie Cafe. "With their counsel and resources, we've clearly defined our growth strategy and are putting into place the right people and infrastructure to substantially expand the Tropical Smoothie Café brand."
Part of the fun for Pressly is working hand in hand with the franchise management team. "I love the operational part," he said. "And we are dealing with people who we really like who are also successful entrepreneurs."
BIP intends that there will be future franchise investments, and "we are not limited by capital," said Pressly. "We may do three franchise deals a year, or we may do one. It just has to be the right deal."
While some funds are looking for buyout opportunities, BIP will focus on growth capital investments, he added.
For more information on BIP Opportunities Fund, contact Shawn Welch at email@example.com or at 404-495-5233, or Scott Pressly at 404-495-5252 or by e-mail at firstname.lastname@example.org. ...continue reading.
It's Official: Denny's Bid Fails
Posted: Tue, May 25, 2010 at 11:46am (CDT)
South Carolina-based Denny's said this morning that shareholders approved its entire slate of board director nominees, beating back an effort by a group of activist investors looking to place three of its own on the board. Nevertheless, while there were significant questions about the investors' intentions and experience, that doesn't mean they didn't have a point. While Denny's has made some admirable efforts to lure more customers, like its free Grand Slam Breakfast promotions, it has had long-term issues with traffic and comp sales declines and it has struggled to compete with IHOP. Unfortunately for Denny's, these issues are not going away.
Denny's Press Release
The Sheen is off Steak & Shake
Posted: Mon, May 24, 2010 at 4:00pm (CDT)
Biglari Holdings, the company formerly known as Steak & Shake, traded down more than 7 percent today. The stock is off by more than a third from the past month. Today's decline left it below the $288 it was trading on Dec. 21, when a 20-for-1 stock split gave the company its misleadingly high share price. We are both impressed with and skeptical of the company's chairman, Sardar Biglari, who wants to turn Steak & Shake into a Warren Buffett-style investment company. Yet, as the decline is due largely to a series of his own missteps, Biglari has a long way to go before he will earn the title of "The Next Buffett."
Quiznos to Get a Taste of its Own Medicine
Posted: Tue, May 18, 2010 at 2:50pm (CDT)
Quiznos's development strategy is taking it places it's never gone before: company-owned locations. The Denver-based sub chain is desperately fending off a brutal string of store closings. Hundreds have closed in recent years, and more closings could come. We talked to one operator who estimated that 80 percent of his market's Quiznos franchisees are in trouble. The company is opening in gas stations and bringing in operating partners. Now it's gone further by announcing that it plans to open company-owned stores this year. That's quite a step for the all-franchised chain.
BusinessWire (press release)
Adding Restaurant Workers
Posted: Mon, May 17, 2010 at 3:39pm (CDT)
Restaurants' financial numbers may present something of a mixed bag of financial health right now, but eateries' hiring decisions do not: They're expanding. According to Labor Department statistics, food and drinking places have added workers each month this year through April, 84,100 overall. Restaurants have been shedding workers for the past two years. The four straight months of employment growth are as clear an indication as any that restaurateurs believe that things are getting better. So they're opening new units and bringing on more workers.
Bureau of Labor Statistics
Coleman: The SBA Stimulus Worked
Posted: Tue, May 11, 2010 at 9:03am (CDT)
According to The Coleman Report, a regular newsletter and website that follows SBA lending news, the number of government-backed SBA 7(a) loans has more than doubled since last year. The SBA guaranteed 13,000 loans in the past quarter, a 125 percent increase over the same period a year earlier. The 90 percent guarantee, up from the typical 75 percent, along with fee waivers has apparently had a big impact.
The Coleman Report